2019 (9) TMI 1393 - AT - Service Tax

Legality of issuance of SCN - Section 73 of the Finance Act - Case of appellant is that the service tax amount having been deposited by the appellant alongwith deposit of interest before the issuance of the show cause notice - HELD THAT - The appellant is not disputing the confirmation of service tax which already stands deposited by them alongwith deposit of interest - In such a scenario we fully agree with the appellant that there was no need to issue the show cause notice and the entire proceedings were deemed to have been concluded in terms of the provisions of Section 73. Appeal allowed in part.

Summary

Issues:
1. Delay in filing the appeal.
2. Liability for service tax on reverse charge basis.
3. Validity of show cause notice and imposition of penalties.
4. Availability of Cenvat credit.
5. Barred by limitation for issuance of show cause notice.

Delay in filing the appeal:
The judgment addresses a delay of approximately 122 days in filing the appeal, which was condoned by the Tribunal. The Hon'ble Allahabad High Court had directed the appellant to file the appeal within two weeks, and since the appeal was filed within the specified period, the delay was excused.

Liability for service tax on reverse charge basis:
The appellant was found liable to pay service tax amounting to Rs. 5,65,026 on reverse charge basis as detected by the Audit team in May 2014. The appellant accepted the liability and deposited the service tax along with interest. The issue of liability for service tax on reverse charge basis was acknowledged by both parties.

Validity of show cause notice and imposition of penalties:
Proceedings were initiated against the appellant through a show cause notice proposing confirmation of the service tax and penalties. The appellant argued that the show cause notice was unnecessary as they had already deposited the tax and interest before the notice was issued. The Tribunal agreed with the appellant, setting aside the penalty imposed and confirming the demand and interest.

Availability of Cenvat credit:
The appellant claimed entitlement to avail Cenvat credit of the duty paid by them. They argued that the entire exercise was revenue neutral as they had maintained records in the ordinary course of business, and no mala fide intent could be attributed to them. The Tribunal did not delve into this issue as the focus was on the validity of the show cause notice.

Barred by limitation for issuance of show cause notice:
The appellant contended that the issuance of the show cause notice was beyond the normal period of limitation, citing a decision of the Hon'ble Allahabad High Court. They argued that the notice should be considered barred by limitation. The Tribunal agreed with the appellant on this point, stating that since the service tax had already been deposited along with interest, there was no need for the show cause notice, and the proceedings should be deemed concluded under Section 73 of the Finance Act.

This comprehensive analysis covers the key issues addressed in the judgment, providing a detailed overview of the Tribunal's decision on each matter.